Frequently Asked Questions
Why is FOS publishing this information?
ASIC Regulatory Guide 139 requires that external dispute resolution schemes like FOS publish this comparative data from 1 January 2010 onwards. We also think that data such as this will help drive efficiencies in the financial services market in the context of dispute resolution.
Will financial services providers benefit?
Financial services providers (FSPs) can compare their disputes performance to that of their competitors, which will help them to set targets for their businesses and direct their resources into the right areas. This should help them to build on the strength of their complaints handling systems and broader customer service programs, and ultimately to strengthen their relationships with their customers. In future years the tables should be even more useful.
How will consumers benefit?
The data might assist a consumer when they are deciding which financial services provider (FSP) from which to acquire a product. It should be understood that the data published covers a six month period only in early 2010. In future Annual Reviews, the Comparative Tables will cover a full year and so will be likely to be more useful.
Why are there so many tables?
We divided all the products and services our members provide into 21 product groups, and we are publishing a Comparative Table for each of these product groups (except for Professional Indemnity Insurance, for which none of our member passed the threshold of three disputes between 1 January and 30 June 2010).
We believe this is the fairest and most meaningful way of presenting the information. Some FSPs operate across many product groups, and their disputes performance may be excellent in some product groups and below par in others. These FSPs and their customers will learn a lot more from seeing the data for specific product groups than from seeing global totals that might hide variations across product groups.
What are the product groups?
FOS divided all the products and services our members provide into the following 21 product groups
- Business finance
- Consumer loans
- Credit cards
- Credit insurance
- Deposit taking/payment systems
- Derivatives/ hedging and securities
- Extended warranties
- Home building insurance
- Home contents insurance
- Housing finance
- Life insurance
- Managed investments
- Margin loans
- Motor vehicle insurance
- Personal and domestic property insurance
- Professional indemnity insurance
- Sickness and accident insurance
- Small business/farm insurance
- Timeshare and strata title schemes
- Travel insurance
A list showing which specific products and services fall into each product group can be found in the introduction to the Comparative Tables on the FOS website.
Why not just publish the raw numbers of disputes?
The approach we have taken ensures that fairer comparisons can be made between FSPs of different sizes. The “Chance of a Dispute Coming to FOS” figure is the number of disputes for an FSP relative to the size of the FSP’s business in that product group.
The size of an FSP’s business has been measured in terms of the number of accounts or policies the FSP held for all products in a product group at 30 June 2009. The FSPs gave FOS the data on their business size for the tables in which they appear.
There is one exception to this: if an FSP failed to send us data on the size of their business for a particular table, we could not, unfortunately, calculate the “Chance of a Dispute Coming to FOS” for this FSP in this table. We have instead stated the raw “Number of Disputes” consumers brought to FOS about this FSP in this product group between 1 January and 30 June 2010. This means it is difficult to assess whether customers of the FSP in this product group were more or less likely to bring a dispute to FOS than the customers of the other FSPs in the table.
Where did the business size data come from?
The “Chance of a Dispute Coming to FOS’ figures in the tables rely on business size information provided by the members of FOS that appear in the tables. That information has not been independently verified by FOS. While we have every confidence in the responses provided by our members, we also note that there is some margin for inconsistency in the ways in which our requests have been interpreted, primarily because of differences in the structure of FSPs’ business operations.
Explanatory notes have been included below the tables to explain special complexities and anomalies relating to particular product groups and particular FSPs. You should read the explanatory notes before interpreting the data in a table.
Do all members of FOS appear in the tables?
FOS had 5357 members at 30 June 2010. We have set a threshold where a financial services provider (FSP) must have had three or more disputes brought to FOS between 1 January and 30 June 2010 in a particular product group to be in the table for that group. This ensures that the data we publish is meaningful without restricting the number of financial services providers (FSPs) that may appear in each table.
The vast majority of our members (around 97%) do not appear in any of the Comparative Tables, because they did not have three or more disputes in any product group.
Why are there so many blanks in the tables?
For some financial services providers (FSPs) in some tables, the “Average Length in the Resolution Process” is blank and every “Outcome of the Resolution Process” category is blank. This means that none of the disputes that FOS received for this FSP in this product group between 1 January 2010 and 30 June 2010 were resolved by 30 June 2010. In other words, all the disputes were still being handled by FOS at the end of the period in question, so we could not say at what stage of the resolution process they were resolved and what the outcomes were. These disputes will be included in the data we use to calculate the figures for the 2010–2011 Comparative Tables.
Why is the outcome of so many disputes classified as “other outcome”?
“Other outcome” includes disputes that were either resolved by the financial services provider (FSP) and applicant without FOS involvement and without notice of the resolution being provided to FOS, or were withdrawn by the applicant or were discontinued. Because the tables are only based on six months of data, for this report there is a large proportion of cases resolved or discontinued before the FOS processes of assessment, conciliation, investigation and decision making could occur. That is not likely to be the case in the 2010-2011 reporting period because more cases will have progressed through the FOS process.
Why are the “Chance of a Dispute Coming to FOS” figures per 100,000 accounts/policies?
The “Chance of a Dispute Coming to FOS” figures represent the number of disputes brought to FOS about an FSP in a product group between 1 January and 30 June 2010 per 100,000 accounts/policies the FSP had at 30 June 2009.
We have used the number of disputes per 100,000 accounts or policies rather than simply the number of disputes divided by the accounts or policies simply to ensure that we get numbers that are easy to read and compare. Multiplying by 100,000 gives us numbers like 4.7 and 6.2, which are easier to make sense of than numbers like 0.000047 and 0.000062. This multiplication doesn’t change the order the FSPs will appear in when they are ranked from highest to lowest or lowest to highest.
Why are there no “Chance of a Dispute Coming to FOS” numbers in the Business Finance table?
“Small business” is defined in FOS’s Terms of Reference (and the Corporations Act) as a business that:
- if the business is or includes the manufacture of goods: had less than 100 employees; or
- otherwise: had less than 20 employees.
Lenders record their lending to small businesses using a range of measures, including the size of the turnover of the business. As a result, not all lenders are able to report on the number of small business loans that have been made to businesses that come within the definition of “small business” in the FOS Terms of Reference. We will be working with our members and the Australian Bankers Association to determine whether in future our members can identify how many of their commercial customers are small businesses according to the definition above.